Building Biodiversity Business doc

Building
Biodiversity
Business
Joshua Bishop, Sachin Kapila, Frank Hicks,
Paul Mitchell and Francis Vorhies
2
4
1
5
3
6
1. One of the 73 frog species found in the
Gamba Complex, Gabon © Carlton Ward Jr.
2. A water lily in Jacana, Botswana
IUCN Photo Library © IUCN / Sue Mainka
3. Masked butterflyfish in the Red Sea, Egypt
IUCN Photo Library © Christian Laufenberg
4.
Chameleo dilepis
© Carlton Ward Jr.
5.
Alcedo leucogaster
© Carlton Ward Jr.
6. Forest in the Garajonay National Park, Spain
IUCN Photo Library © Jim Thorsell
Carlton Ward Jr. is an environmental photojournalist from Florida,
USA with graduate training in ecology and anthropology. Through
his photographs, he aims to promote conservation of natural
environments and cultural legacies.
Building Biodiversity Business
Joshua Bishop

1
, Sachin Kapila
2
, Frank Hicks
3
, Paul Mitchell
4
and Francis Vorhies
5
1 IUCN (International Union for Conservation of Nature)
2 Shell International Limited
3 Forest Trends
4 Green Horizons Environmental Consultants Limited
5 Earthmind
2008
Publication Data
Bishop, J., Kapila, S., Hicks, F., Mitchell, P. and Vorhies, F. 2008.
Building Biodiversity Business. Shell International Limited and the International Union for Conservation of Nature:
London, UK, and Gland, Switzerland. 164 pp.
© Shell International Limited, International Union for Conservation of Nature and Natural Resources and the authors 2008
ISBN: 978-2-8317-1019-8
Reproduction of this publication for educational or other non-commercial purposes is authorised without prior written permission
from the copyright holder provided the source is fully acknowledged.
Reproduction of this publication for resale or other commercial purposes is prohibited without prior written permission of the
copyright holder.
In this report the collective expression “Shell” is sometimes used for convenience in contexts where reference is made to the
companies of the Royal Dutch / Shell Group in general or where no useful purpose is served by identifying a particular company
or companies.
The findings, interpretations and conclusions expressed here are those of the authors and do not necessarily reflect the views of
Shell, IUCN or those interviewed. Any errors are purely the responsibility of the authors.

All economic values are as noted in quoted source materials and have not been converted to the equivalent value in 2008 terms.
This review should not be used as the basis for investments or related actions and activities.
Cover design by 3R Communications Ltd.
Graphic design by Shell Visual Media Services.
1
Contents
Contents
Acknowledgments 6
Author information 7
Preface 8
Executive summary 10
Chapter 1. Introduction 14
Chapter 2. Context: the biodiversity challenge 16
2.1 Biodiversity, ecosystem services and conservation 16
2.2 Funding biodiversity conservation 20
Chapter 3. Rationale: why biodiversity business? 24
3.1 The business case for biodiversity 25
3.2 The conservation case for biodiversity business 27
3.3 The development case for biodiversity business 28
Chapter 4. The biodiversity business landscape 30
4.1 The spectrum of biodiversity business 31
4.2 Agriculture 33
4.2.1 What is ‘biodiversity-friendly’ agriculture? 33
4.2.2 Agriculture – status and trends 34
4.2.3 Agriculture – what is working / not working 37
4.2.4 Agriculture – gaps and business investment opportunities 40
4.3 Forestry 41
4.3.1 What is sustainable forestry? 41
4.3.2 Forestry – status and trends 42
4.3.3 Forestry – what is working / not working 43

4.3.4 Forestry – gaps and business investment opportunities 45
4.4 Non-timber forest products 46
4.4.1 What are NTFP? 46
4.4.2 NTFP – status and trends 47
4.4.3 NTFP – what is working / not working 48
4.4.4 NTFP – gaps and business investment opportunities 51
4.5 Fisheries and aquaculture 52
4.5.1 What are sustainable fisheries? 52
4.5.2 Fisheries and aquaculture – status and trends 53
4.5.3 Fisheries and aquaculture – what is working / not working 55
4.5.4 Fisheries and aquaculture – gaps and business investment opportunities 57
2
Building Biodiversity Business
4.6 Biocarbon 58
4.6.1 What is biocarbon? 58
4.6.2 Biocarbon – status and trends 59
4.6.3 Biocarbon – gaps and business investment opportunities 63
4.7 Payments for watershed protection 64
4.7.1 What is watershed protection? 64
4.7.2 Payments for watershed protection – status and trends 65
4.7.3 Payments for watershed protection – gaps and business investment opportunities 65
4.8 Bioprospecting 68
4.8.1 What is bioprospecting? 68
4.8.2 Bioprospecting – status and trends 69
4.8.3 Bioprospecting – what is working / not working? 71
4.8.4 Bioprospecting – gaps and business investment opportunities 73
4.9 Biodiversity offsets 75
4.9.1 What are biodiversity offsets? 75
4.9.2 Biodiversity offsets – status and trends 76
4.9.3 Biodiversity offsets – gaps and business investment opportunities 78

4.10 Biodiversity management services 80
4.10.1 What are biodiversity management services? 80
4.10.2 Biodiversity management services – status and trends 83
4.10.3 Biodiversity management services – gaps and business investment opportunities 83
4.11 Ecotourism 84
4.11.1 What is ecotourism? 84
4.11.2 Ecotourism – status and trends 86
4.11.3 Tools for managing impacts 87
4.11.4 Ecotourism contributions to conservation 88
4.11.5 Ecotourism – what is working / not working 89
4.11.6 Ecotourism – gaps and business investment opportunities 90
4.12 Recreational hunting and sportfishing 92
4.12.1 Hunting and sportfishing – status and trends 92
4.12.2 Hunting and sportfishing – what is working / not working 94
4.12.3 Hunting and sportfishing – gaps and business investment opportunities 95
4.13 Conclusions on the biodiversity business landscape 96
4.13.1 Enabling environment 97
4.13.2 Business development services 98
4.13.3 Investment opportunities 99
Chapter 5 Review of biodiversity business promotion mechanisms 102
5.1 Mechanisms to promote biodiversity business 102
5.1.1 Enabling environment 103
5.1.2 Business tools 104
5.1.3 Financing instruments 105
3
Contents
5.2 Review of mechanisms 105
5.2.1 Creating an enabling environment for biodiversity business 106
5.2.2 Mandatory policy 107
5.2.3 International laws and regulations 107

5.2.4 Local and national policy and institutions 109
5.2.5 Voluntary policies 113
5.2.6 Key lessons / challenges and opportunities 116
5.3 Biodiversity business tools 118
5.3.1 Introduction 118
5.3.2 A typology of biodiversity business tools 118
5.3.3 Key lessons / challenges and opportunities 121
5.4 Financing instruments 123
5.4.1 Financing instruments – the range 123
5.4.2 Key lessons / challenges and opportunities 127
5.5 Conclusions on business promotion mechanisms 128
Chapter 6. Conclusions 130
6.1 Key findings and opportunities 130
6.2 Critical success factors 133
6.3 Towards a Biodiversity Business Facility 134
6.3.1 What exactly would a Biodiversity Business Facility do? 138
6.3.2 How to develop a Biodiversity Business Facility 138
6.4 Closing remarks 139
Appendix A. Overview of selected biodiversity funds 142
Appendix B. Overview of selected think-tanks and business incubators 148
Glossary and list of acronyms 150
Glossary 150
Acronyms 153
Index 156
4
Building Biodiversity Business
List of figures
Figure 1. Extinctions per thousand species per millennium 18
Figure 2. Growth of global protected areas over time 19
Figure 3. The Red List Index for birds in different ecosystems 20

Figure 4. Regional variation in the percentage of the overall cost of effective reserve networks that are met 21
Figure 5. Biodiversity in development finance: tapping new sources 22
Figure 6. Area of organic agriculture and wild harvested plants worldwide 38
Figure 7. Certified forest area worldwide 43
Figure 8. Aquaculture production in developed and developing countries 54
Figure 9. Growth of the global carbon market (value of carbon contracts) 60
Figure 10. Orders of magnitude in drug discovery 69
Figure 11. Biodiversity offsets and net positive impact 76
Figure 12. The growth of international tourist arrivals 86
Figure 13. The ‘playing fields’ of interest 103
Figure 14. General screening process 131
Figure 15. Overview of a Biodiversity Business Facility 134
Figure 16. What would a Biodiversity Business Facility do? An illustration for NTFP 139
List of tables
Table 1. Status of the USA mitigation market 77
Table 2. Biodiversity management services offered by different providers 82
Table 3. A tourism typology 85
Table 4. Selected ecosystem markets and their potential for growth 96
Table 5. Global subsidies 1994–1998 (US$ billion per annum) 112
Table 6. Certification strengths and weaknesses: the case of coffee 116
Table 7. BioTools for biodiversity business 119
Table 8. The financing spectrum 124
Table 9. Biodiversity Business Facility – SWOT analysis 136
Table 10. Attributes of a Biodiversity Business Facility 137
List of boxes
Box 1. Biofuels and biodiversity 34
Box 2. Combining rural development and biodiversity conservation 36
Box 3. UNCTAD BioTrade principles and criteria 39
Box 4. Promoting certified timber markets in Central America 44
Box 5. High Conservation Value Network launched 44

Box 6. The value of wild plants, animals and freshwater fisheries in Senegal 46
Box 7. Bamboo and rattan – facts and figures 47
Box 8. The sustainability of the bushmeat trade 48
Box 9. Linking conservation and local economic development at Flower Valley, South Africa 48
Box 10. PhytoTrade Africaa 50
Box 11. The Marine Stewardship Council and certification of fisheries 56
Box 12. ForTuna by WWF and TRAFFIC 57
Box 13. A selection of biocarbon initiatives 60
Box 14. The potential of avoided deforestation 62
Box 15. The Climate, Community and Biodiversity Standards 63
5
Contents
Box 16. Payments for watershed protection in Costa Rica 65
Box 17. The Water Fund 67
Box 18. The National Biodiversity Institute of Costa Rica 70
Box 19. The Inland Sea Shorebird Reserve 76
Box 20. The International Petroleum Industry Environmental Conservation Association (IPIECA) and the
International Association of Oil and Gas Producers (OGP) Biodiversity Working Group (BDWG) 80
Box 21. Guidelines and standards in the tourism industry 87
Box 22. Sustainable Tourism Stewardship Council 88
Box 23. Rainforest Expeditions 89
Box 24. Establishment of an ecofund through tourist contributions 91
Box 25. Hunting and fishing associations and conservation activities 93
Box 26. The Luangwa Integrated Resource Development Project in Zambia 94
Box 27. Biodiversity policy in the forest sector 110
Box 28. Fiscal incentives for private reserves in Brazil 111
Box 29. Corporate social responsibility standards and biodiversity 114
Box 30. IFC and biodiversity on the opportunity side 120
Box 31. Indicators of biodiversity performance 121
Box 32. The GEF, World Bank and biodiversity finance 124

Box 33. Terra Capital Biodiversity Enterprise Fund for Latin America 126
6
Building Biodiversity Business
Acknowledgments
This report was prepared by Joshua Bishop (IUCN), Sachin Kapila (Shell International Limited), Frank Hicks (Forest Trends) and
two consultants: Paul Mitchell (Green Horizons Environmental Consultants Limited) and Francis Vorhies (Earthmind). We would
like to acknowledge the support of the following people for their input and assistance during the preparation of this report:
Project Steering Committee: IUCN (William Jackson, Gabriel Lopez), Shell Foundation (Kurt Hoffman), Shell International •
Limited (Richard Sykes) and Royal Dutch Shell (Lex Holst).
START Challenge Team (Shell Global Solutions): Dave Sands, Keara Robins, Anne Ooms and Linda McKane. •
Michael Jenkins (Forest Trends) for his early encouragement and practical support throughout the study.•
Reviewers of previous drafts, including: Matt Arnold, Nick Bertrand, Gary Bull, Rebecca Butterfield, Guilia Carbone, •
Santiago Carrizosa, Catherine Cassagne, Giles Davies, Herbert Diemont, Ben Dixon, Holly Dublin, John Forgach, Phil
Franks, Dominique Ganiage, Alastair Green, Sjef Gussenhoven, Tom Hammond, Dixon Harvey, Nigel Homer, William
Jackson, Namrita Kapur, Horst Korn, Pedro Leitao, Iris Lewandowski, Niall Marriott, Peter May, Jeff McNeely, Bernard
Mercer, James Morant, Jennifer Morris, Tammy Newmark, James Parker, Matthew Parr, Adam Pool, Lorena Revelo, Luiz
Ros, Rina Rosales, Chucri Sayegh, Jeff Sayer, Sonal Shah, James Spurgeon, Ian Swingland, Jolanda van Schaick, Sonja,
Vermeulen, Terry Vogt, Angelika Voss, Karen Westley and Clive Wicks.
Special thanks to Mohammad Rafiq (IUCN) for his challenging and constructive input on numerous occasions, to Rick •
Steiner (University of Alaska) for his inspiring ideas on private sector support for biodiversity conservation, and to Chris
West (Shell Foundation) for his practical insights into the challenge of blending business interests and the public good.
All those consulted during the interviews for their time, insight and expertise.•
Gill Dwyer Stanbridge and Madi Gray for their editorial assistance.•
7
Joshua Bishop
Dr Joshua Bishop is Senior Adviser, Economics and Environment, at IUCN. His work focuses on how to promote economically
efficient and more equitable approaches to nature conservation, while also presenting the case for conservation in economic
terms. Prior to joining IUCN, Dr Bishop worked at the International Institute for Environment and Development in London, and
as a consultant and staff member of several organisations in West Africa. A consistent theme of his work has been to enhance
the contribution of nature conservation to poverty reduction through the use of economic tools and market-based mechanisms.

Dr Bishop holds a BA from Yale University, an MPP from Harvard University, and a PhD from University College London.
Sachin Kapila
Mr Sachin Kapila is Group Biodiversity Adviser within the Sustainable Development Division of Shell International Limited.
He has a broad range of experience encompassing strategy, project management and on-the-ground implementation, and
a responsibility for establishing global biodiversity policy, developing appropriate tools and guidelines and managing /
fostering relationships with key external organisations. Sachin came to Shell from one of the world’s largest environmental
consultancies covering a variety of regions including Latin America, Africa, South-East Asia and the Middle East. He has
a personal interest both in developing new and innovative approaches to conservation financing through market-based
solutions and in methods of attracting investment through capital markets to deliver benefits to investors, the environment and
local communities.
Frank Hicks
Mr Frank Hicks has over 20 years of international development experience, the majority of which has been gleaned in
developing countries. He is currently Director of the Business Development Facility at Forest Trends. Prior to this he founded
and was President of Sustainable Development International, a Costa Rican organisation that provides consulting services on
sustainable agriculture, agricultural certification, enterprise development, strategic planning, and development finance. He
has also been Director of the Rainforest Alliance’s Sustainable Agriculture Program, and Vice President of Organic Commodity
Products, an organic chocolate company, based in Costa Rica. Having been involved in promoting community-based eco-
enterprises in various guises for many years, working on this report provided an exciting opportunity to analyse biodiversity
business across a spectrum of industrial sectors and to feed information and insights into his work with Forest Trends.
Paul Mitchell
Dr Paul Mitchell is an independent consultant with over 15 years experience of management of environmental and social
issues in the natural resources sector. His particular focus has been mining, aggregates and oil and gas in Europe, the
Americas, Asia and Africa. In recent years he has worked closely with clients including the Energy and Biodiversity Initiative
and the Business and Biodiversity Offset Program on guidance for companies that wish to improve their management of
biodiversity. This report represents an opportunity for him to explore a complementary market-based approach and take a
look at the ‘bigger picture’ of conserving biodiversity.
Francis Vorhies
Dr Francis Vorhies has over 20 years of international experience as a sustainability economist. In Johannesburg he set up
Eco Plus, an innovative consultancy focused on business, economics and the environment, and in Nairobi he worked for
the African Wildlife Foundation under a United Nations Development Programme (UNDP) / Global Environment Facility

(GEF) grant to build biodiversity economics capacity in the forestry sector. In Geneva, Dr Vorhies established new global
programmes on economics and business for IUCN, and in Oxford he was the chief executive officer of the European affiliate
of the Earthwatch Institute. In early 2005, Dr Vorhies followed his wife’s career back to Geneva and founded Earthmind,
a not-for-profit sustainability network. His interest in this publication is based on his belief that capitalist tools can help us to
conserve biodiversity.
Author information
Author information
8
1 Billion is equivalent to thousand
million throughout this publication.
Preface
The natural diversity of the living world, with its myriad species, complex ecosystems
and constantly evolving genetic structure, is a priceless inheritance. At the same
time, this biodiversity is commonly under-valued by modern economies, resulting
in its rapid and accelerating disappearance. Some experts liken the current rate
of biodiversity loss to the great extinctions of prehistoric eras, with the important
difference that today’s loss is entirely due to human activity.
Ironically, while the biological foundation of our lives is eroding beneath our
feet, human economies continue to thrive, generating ever-greater quantities and
qualities of material goods and consumer services. Poverty and conflict continue
to afflict the lives of billions
1
, but at the same time overall economic growth means
that increasing numbers of people around the world enjoy unprecedented levels
of prosperity.
On the one hand, diminishing biodiversity, and on the other, expanding economies.
The two phenomena are not unrelated. Modern economies are very good at
producing what people will pay for. They are not so good at preserving what
is priceless. Much of the ongoing loss of biodiversity can be attributed, directly
or indirectly, to the production and consumption of goods and services to meet

human needs. The growing problem of climate change will further exacerbate
biodiversity loss.
Action is urgently required to halt the loss of biodiversity, but governments and non-
governmental organisations (NGOs) cannot do it alone. Policies and regulations
that require business and consumers to reduce their environmental footprint
are important, but not sufficient. Much existing biodiversity policy is essentially
‘swimming against the tide’ of economic growth, and constantly falling short. Taxing
businesses and consumers or seeking charity from them could raise significant sums
for biodiversity conservation, but does little to alter day-to-day decision-making in
the market place.
The question is how to enlist both the purchasing power of consumers and the
productive capacity of business to help meet the global biodiversity challenge. This
in turn requires that we find ways to make a stronger business case for biodiversity
conservation.
With a little ingenuity (and political will), a compelling business case can be
constructed for environmental protection and improvement. Twenty years ago, few
people imagined that an entire industry could be created around mitigating climate
change. Today it is a reality – the international carbon trade, for example, topped
US$30 billion in 2006 and is expected to exceed US$50 billion by 2008. Why
not the same for biodiversity?
Can we create or expand markets for genetic diversity, species conservation and
ecosystem resilience in the same way that markets have been created at a global
level for carbon, and in some countries for sulphur dioxide (SO
2
), nitrogen oxide
(NO
X
) and groundwater salinity? The power of market-based environmental policy
is no longer in doubt. But biodiversity is still largely neglected by private finance.
The challenge of building biodiversity business is not trivial. There is a need

to develop new business models and market mechanisms for biodiversity
conservation, while also raising awareness and persuading the public and policy-
9
makers that biodiversity (or component ecosystem services) can be conserved on a
commercial basis. Recent experience with market-based approaches to controlling
carbon dioxide (CO
2
) and other pollutants provides practical cautions as well as
encouragement.
This report is the fruit of collaboration between IUCN and Shell International
Limited, which aim to identify potential market-based mechanisms and new business
opportunities to conserve biodiversity. It represents the results of consultation with
more than 60 organisations, including commercial banks and insurance companies,
private foundations, multilateral and bilateral aid agencies, NGOs, think-tanks,
academics and investment fund managers.
Based on in-depth interviews and a detailed literature review, this report provides a
snapshot of the biodiversity business landscape. It reviews a range of biodiversity
business sectors, assesses what has worked (or not) and why, describes the
main constraints and identifies opportunities to expand market-based biodiversity
conservation within each sector. The report also reviews the policy frameworks,
technical resources and financing mechanisms needed to enable biodiversity
businesses to grow, in each case highlighting lessons learned from experience
and future opportunities.
The authors conclude that there are numerous pro-biodiversity business opportunities
that can generate positive financial returns as well as real biodiversity benefits.
Many initiatives have been established with impressive results – however, none
have achieved significant scale or leveraged substantial private investment. There is
a need to build on existing initiatives, recruit additional investors and entrepreneurs,
and ‘raise the bar’ in terms of both the scale and conservation benefit of private
investment. To this end, three separate but related institutional functions must be

fulfilled: namely the development of appropriate enabling policy; the provision of
technical and managerial support tailored to biodiversity business; and access to
appropriate finance from investors who understand the particular constraints and
opportunities of creating new businesses and markets.
We hope this report will be of interest to a wide audience, including those who
are new to biodiversity business, as well as current and future practitioners. For
Shell and IUCN, this report provides the foundation for future collaboration on
business-oriented approaches to biodiversity conservation. Yet this report is not
just about Shell and IUCN, or what they can achieve by working together. The
ultimate aim is to identify new opportunities and mechanisms that can mobilise a
broad coalition of businesses, conservationists and other stakeholders around a
shared vision of market-based biodiversity conservation.
Preface
10
Executive summary
Biodiversity forms the foundation and fabric of life on earth but is eroding beneath
the feet of human activity. In the poorest countries, the deterioration of the natural
environment is making it increasingly difficult for millions of people to meet even
bare subsistence needs. Equally, as countries prosper, society is becoming less
tolerant of environmental damage and increasingly aware of the extent to which
our economies depend on healthy and diverse ecosystems.
Successive international treaties and national strategies have committed governments
to stem the tide of biodiversity loss. An imposing edifice of environmental policy
is in place in most countries. As much as US$20 billion per year is raised from
public finance and private philanthropy for global conservation activities – much
of this money is used to maintain over 100,000 protected areas covering nearly
12 percent of the world’s land surface. Yet all this is not sufficient. The fact is that
current efforts to conserve biodiversity are overwhelmed by the adverse impacts of
growing human economies. Spending on protected areas remains deficient and
undervalued ecosystem services are being eroded.

If current approaches to conservation are not sufficient, what more can be
done? One answer is to harness the very market forces that are often blamed
for biodiversity loss. The challenge is to re-orient the economic incentives that
drive private investment, production and consumption, and to make biodiversity
conservation a viable business proposition in its own right. In other words: building
biodiversity business.
Biodiversity business is defined in this report as: ‘commercial enterprise that
generates profits via activities which conserve biodiversity, use biological
resources sustainably, and share the benefits arising from this use equitably’.
This definition reflects the three over-arching goals of the United Nations Convention
on Biological Diversity (CBD), which also calls for increased efforts to enlist the
private sector in biodiversity conservation, sustainable use and equitable benefit
sharing. In both the environmental and business communities, there is growing
recognition of the potential to conserve biodiversity on a commercial basis. If
even a small proportion of private capital flows, international trade and national
economic output could be harnessed for biodiversity business, the resulting
contribution to conservation would be enormous. Increased private investment
in biodiversity business would have the greatest impact in developing nations,
where the conservation funding gap is most extreme and where many critically
endangered species and habitats are virtually unprotected today.
This report presents a snapshot of the emerging biodiversity business landscape,
its constraints, opportunities and requirements. It is based on a 12-month study
involving literature review, analysis and extensive consultation with practitioners,
policy-makers, donors and commercial investors.
From a conservation perspective, a major attraction of biodiversity business is the
potential to generate new and additional investment in conservation activities.
At the same time, some people remain sceptical of the motives of the private
sector; while others worry that market-based approaches may distort conservation
priorities. Nevertheless, this report argues that not exploring what markets can
deliver is no longer an option.

11
From a business perspective, the reasons to invest in biodiversity business are
increasingly compelling. They are most obvious in cases where private profitability
depends directly on the health of ecosystems – ecotourism ventures, for instance.
Similarly, it is now recognised that greater variability in genes, species and
ecosystems is associated with increased resilience and biological productivity in
agriculture, ranching, forestry and marine fisheries. Even businesses in urban areas,
lacking a direct interaction with the natural world, can be motivated by new policy
incentives and changing consumer preferences to ‘go green’. Corporate action on
biodiversity can help businesses distinguish themselves from competitors while also
improving relations with investors, employees, local communities and others.
New biodiversity business models may also help reduce rural poverty. While
employment and skills development are a normal part of every business, biodiversity
business has the added benefit that it often stimulates a flow of funds from
relatively wealthy urban centres to the countryside, as well as from industrialised to
developing nations. Growing markets for ecosystem services and for biodiversity-
friendly energy, food, fibre and recreation should provide ample opportunities for
rural entrepreneurship and employment.
Today, biodiversity conservation is mainly viewed by business as a risk or liability,
rather than a potential profit centre. However, this perception is beginning to
change. As public awareness of the global biodiversity crisis grows, an increasing
number of companies see a business advantage in developing processes
to integrate biodiversity into their operations, as well as seeking market-based
solutions and opportunities. Furthermore, even with modest initial returns from most
biodiversity business investments – in the range of 5 to 10 percent per annum
– there are significant profits to be made as the sector grows from niche markets
to mainstream business.
A broad spectrum of different sectors and models of biodiversity business are
examined in detail in this report. Their status and trends are described, along with
constraints and opportunities for investment.

Examples include organic agriculture and certified timber. By demonstrating the
potential of more sustainable production practices, these businesses are showing
the way forward for mainstream agriculture and industrial forestry – sectors
historically responsible for significant biodiversity loss. Although accounting for
less than 5 percent of the overall market today, the growth rate of sustainable or
certified products is three to four times greater than the market average. The market
for sustainably harvested timber and organic agriculture, for example, has been
growing at double-digit rates.
Businesses that provide a range of ecosystem services in emerging markets such
as water quality and watershed protection are also considered in the report.
One major area of growth is the demand for climate mitigation services through
‘biocarbon’ – i.e. biomass-based carbon sequestration in forests and wetlands
and through soil conservation.
Another biodiversity business is based on the search for new compounds, genes
and organisms in the wild, known as bioprospecting, an industry that could be
worth US$500 million by 2050. The report also examines ecotourism, sport
hunting and fishing. The latter sectors are already large and growing: ecotourism
Executive summary
12
Building Biodiversity Business
is expanding at a rate of 20–30 percent per year as compared to 9 percent for
tourism as a whole, while private expenditure on recreational hunting and fishing
is estimated at US$70 billion per year in the USA alone.
Less conventional markets include biodiversity offsets, wetland mitigation,
conservation easements and biodiversity banking. Such businesses can be based
on either legislation or voluntary commitments that oblige companies to minimise
the biodiversity loss resulting from their activities and to offset (compensate) for
residual losses by restoring or enhancing comparable sites. Emerging experience
in Australia, Brazil, South Africa and the United States has shown that such
approaches can make a significant contribution to conservation efforts and

generate substantial business opportunities for offset providers, although there are
concerns about the environmental effectiveness of offsets.
One major hurdle facing all biodiversity businesses is developing practical indicators
for measuring negative impacts and positive contributions to biodiversity. Experience
in some countries shows that biodiversity assets, in the form of endangered species
or natural habitat, can be registered, tracked and even traded under appropriate
regulatory frameworks. Nevertheless, the world still lacks agreed standards,
methods and indicators for valuing ecological assets and ecosystem services.
The development of biodiversity business also depends on a conducive enabling
environment, namely the framework of laws, regulations, taxes, subsidies, social
norms and voluntary agreements within which companies operate. For businesses
to value biodiversity, it must ultimately become more profitable to conserve
biodiversity than to ignore or destroy it. A combination of increased rewards for
conservation, increased penalties for biodiversity loss and increased information
on the biodiversity performance of business will help to create a biodiversity-
friendly economy.
In many countries, significant reform of the enabling environment may be required
to enable biodiversity business to grow, particularly where existing policies are
predicated on conservation of biodiversity by governments and charities, where
the role of business in conservation is limited by law, or where policy incentives
such as ‘perverse subsidies’ are causing continued harm to ecosystems.
Another constraint on biodiversity business is the lack of understanding between
the worlds of business and nature conservation. Priorities, time scales and
jargon all differ. Natural scientists often lack the financial acumen and consumer
orientation of the private sector; conservationists typically lack business planning
and management skills. At the same time, most business people lack understanding
of how their companies’ operations affect and are affected by biodiversity and
ecosystem services, or how to manage biodiversity in their operations. In addition,
the long-standing difficulties of integrating conservation and development agendas
still remain. Nevertheless, new biodiversity business tools are being developed

that can bring these worlds together and bridge gaps in planning, management
and performance assessment.
Even with the best policies and tools in the world, biodiversity benefits will not
materialise or be sustained unless biodiversity businesses survive long enough
to become commercially viable. Access to patient capital for investment and
expansion is a critical factor in the growth of biodiversity businesses. While most
businesses depend on financial support from banks or investors to cover initial
start-up costs, in the case of biodiversity businesses there may be a need for some
grant finance or subsidies to help entrepreneurs get beyond the pilot and learning
phase and to stimulate demand for commercial conservation services.
13
Various existing financing instruments have been adapted for biodiversity business,
ranging from grants to debt and equity finance. The experience of early and
on-going initiatives can help guide the choice of an appropriate financing blend
for new biodiversity businesses. While most biodiversity fund managers seek
co-financing and prefer debt finance to equity, a range of innovative financial
solutions are being tested that combine commercial and non-commercial investors.
The integration of financing with technical and business support is increasingly
common and can help ensure that biodiversity business delivers significant
conservation outcomes as it grows.
These are early days for biodiversity business and there is much to learn. One
clear need is for an integrated approach to building biodiversity business,
combining policy advice, technical assistance and innovative finance, at a vastly
increased scale compared to current efforts. This report outlines a proposed
Biodiversity Business Facility, which would function as: (i) a think-tank, to address
and influence the enabling environment and develop biodiversity business metrics;
(ii) a business incubator, to build capacity and provide technical assistance to
support new biodiversity business ventures; and (iii) a funding mechanism, to
invest in and secure co-finance for growing biodiversity businesses. Although the
eventual scope and form of such a Facility remains to be defined, its potential

impact could be enormous. The first step is to assemble a portfolio of biodiversity
business enterprise, in order to test, refine and demonstrate the viability of this new
approach to conservation.
Around the world, there are mangrove forests that may soon be cleared to make
way for shrimp farms, but which could instead be conserved through ‘payments
for ecosystem services’ as natural fish hatcheries, storm buffers and water filtration
systems. Similarly, there are thousands of fragments of degraded natural habitat
that could be linked and restored, by means of biodiversity offsets, to form vital
biological corridors for threatened species. And rural communities around the
world could be supported to build the skills and networks necessary to market
valuable non-timber forest products.
For such initiatives to flourish, for pro-biodiversity markets to develop, fixed ideas
and institutional inertia need to be overcome. Experience is the best teacher and
the coming years will be crucial to demonstrate, document and share the results
of various market-based approaches to biodiversity conservation in different
contexts.
Rhetoric is not sufficient. What is needed are more concrete examples of
financially viable biodiversity businesses and functioning markets for ecosystem
services. Only on the basis of practical experience will it be possible to convince
all stakeholders – public and private – to work together to conserve biodiversity on
a sustainable and commercial basis. The ultimate aim of this report is to promote
more informed experimentation and investment, based on a clear understanding
of what biodiversity business needs to thrive.
Executive summary
14
Introduction
This report explores the potential of market-based approaches
to biodiversity conservation and develops a framework for
building new biodiversity business models.
Market mechanisms are not a panacea but can be a

powerful complement to existing approaches to biodiversity
conservation.
The report aims to learn from efforts to broaden the scope of
biodiversity conservation, assess experience of market-based
approaches and identify high potential opportunities to build
biodiversity business.
This report explores the lessons and potential of market-based approaches to
biodiversity conservation. The premise of this report is that international commitments
to halt the loss of biodiversity cannot be achieved unless, and until, the conservation
of ecosystems becomes a positive business proposition on a global scale.
The rationale for conserving biodiversity through the market is increasingly widely
recognised. The Millennium Ecosystem Assessment (MA) – a peer-reviewed, four-
year, global assessment of the consequences of ecosystem change for human
well-being – concluded that: “new business opportunities will emerge as demand
grows for more efficient or different ways to use ecosystem services for mitigating
impacts or to track or trade services”
2
.
There are many ways and means to engage business in biodiversity conservation,
of course, including increased regulation and awareness-raising to discourage
environmentally harmful activities, increased tax and / or charitable contributions
by business to conservation activities, and more research and development (R&D)
to promote biodiversity-friendly technologies. The focus of this report on building
business models and markets for biodiversity does not imply any criticism or
devaluation of such approaches, which should be seen as complementary.
The concept of ‘biodiversity business’ is developed in this report as a framework for
identifying and promoting new business opportunities, linked to the conservation
and sustainable use of biodiversity and equitable sharing of the benefits and costs
arising from its use. More specifically, this report aims to:
Learn from efforts in the public sphere to broaden the scope of biodiversity •

conservation across the landscape, both within and outside the network of
protected areas (PAs); to restore degraded ecosystems and conserve intact
habitat; and to ensure positive benefits for local communities, both as an end
in itself and because conservation is not sustainable without their support.
Assess the main obstacles to market-based approaches to biodiversity •
conservation, such as lack of finance, limited knowledge about how to supply
biodiversity through the market, lack of enabling policy for market-based
biodiversity conservation, and weak capacity of governments to develop and
implement such policies.
2 Millennium Ecosystem Assessment. 2005.
Ecosystems and Human Well-Being:
Opportunities and Challenges for Business
and Industry. World Resources Institute:
Washington, D.C. (www.maweb.org).
Chapter 1
15
Identify high potential opportunities to build biodiversity businesses, including •
investment in commercial enterprise as well as activities that build the foundations
of biodiversity markets, such as market research and product development,
pilot testing of biodiversity business concepts, pre-commercial purchase of
biodiversity services based on competitive business principles, and, where
appropriate, policy advice related to market creation for biodiversity.
Chapter 2 and Chapter 3 of the report provide the context and rationale for
focusing on market-based approaches to biodiversity conservation. They set
out the business case for biodiversity and the conservation case for business,
together with other perspectives on market-based biodiversity conservation.
Chapter 4 forms the core of the report, assessing a range of business models
that generate biodiversity benefits, as well as gaps and opportunities for new
investment. Chapter 5 describes the enabling policies, business tools and financing
instruments used to build biodiversity business, concluding again with an analysis

of gaps and opportunities. Finally, Chapter 6 provides an overall conclusion and
recommendations for the further development of biodiversity business.
This report is intended to provoke discussion and debate, but also to provide
a resource for all those who may be interested in market-based approaches to
biodiversity conservation. More importantly, we hope that this report reinforces
efforts to integrate economic development with biodiversity conservation, especially
for rural communities in developing countries, whose livelihoods and security are
intimately linked to the conservation and sustainable use of their surrounding
biological resources.
Chapter 1 Introduction
16
Context: the biodiversity
challenge
Global environmental challenges and the persistence of
poverty are increasingly well documented, as is the rapid
erosion of biological diversity in most parts of the world.
Government-established protected areas cover 12 percent
of the earth’s land area, but many diverse ecosystems are
under-represented, particularly marine ecosystems, while even
well-managed protected areas are increasingly vulnerable to
external pressures, such as climate change.
Inadequate funding and generally weak public sector
institutions seriously handicap conservation efforts in developing
countries.
Global funding for biodiversity conservation relies heavily on
public spending and philanthropy, although in many countries
the private sector plays an increasing role.
Estimates of the additional funding required to halt biodiversity
loss on a global scale range from as little as US$1 billion per
annum up to US$45 billion per annum, reflecting not only

diverse ambitions but also the lack of reliable data on current
spending and its effectiveness.
Contemporary concerns of conservationists and the wider sustainable development
community focus on the continuing deterioration of the natural environment, together
with the persistence of poverty in many parts of the world. The Millennium Ecosystem
Assessment (MA) is the most recent comprehensive statement of the significant
environmental challenges facing society today, which include climate change,
biodiversity loss, increasing water scarcity, and nutrient deposition
3
. The challenge
of poverty is likewise well documented by many different organisations, such as the
World Bank and the UN Millennium Project. The need for a coordinated global
response to environmental and development challenges has been recognised for
many years and is illustrated by the proliferation of multilateral agreements and
policy statements, notably the World Summit on Sustainable Development (2002)
and the Millennium Development Goals (www.un.org/millenniumgoals).
2.1 Biodiversity, ecosystem services and conservation
This chapter focuses on responses to the loss of biological diversity (or ‘biodiversity’),
as articulated in the United Nations Convention on Biological Diversity (CBD).
The CBD defines biodiversity as: “the variability among living organisms from all
sources including, inter alia, terrestrial, marine and other aquatic ecosystems and
the ecological complexes of which they are part; this includes diversity within
species, between species and of ecosystems” (Article 2).
3 www.maweb.org.
Chapter 2
17
The CBD further defines and provides guidance for the ‘sustainable use’ of
biodiversity and its component resources. The latter include “genetic resources,
organisms or parts thereof, populations, or any other biotic component of
ecosystems with actual or potential use or value for humanity”, while sustainable

use is defined as “the use of components of biological diversity in a way and at
a rate that does not lead to the long-term decline of biological diversity, thereby
maintaining its potential to meet the needs and aspirations of present and future
generations”.
Put simply, biodiversity is ‘life on earth’. At a fundamental level, all economies and
all businesses depend, directly or indirectly, on biodiversity and its component
resources. Biodiversity is similarly recognised in the MA as the foundation of all
ecosystem services, which in turn support and protect economic activity and
property
4
. The MA adopts an inclusive definition of ecosystem services, which
consist of provisioning, regulating, supporting and cultural benefits provided by
natural ecosystems.
A growing body of research documents how biological diversity increases
economic productivity in a range of sectors, enhances our direct enjoyment of
nature, reduces ecological and health risks, and improves resilience in the face of
shocks
5
. Thus, by conserving biodiversity, we secure the ecosystem services upon
which all economies rely.
Despite the socio-economic importance of biodiversity and ecosystem services,
their values are not well reflected in contemporary economic and development
policies, investment decisions and private consumption patterns. This has been
highlighted repeatedly in multilateral policy discussions, for example the 2007
G8 environment ministerial meeting in Potsdam, which called for a study of “the
economic significance of the global loss of biodiversity” as well as efforts to
enhance public and private financing of conservation
6
.
Humanity’s dependence on biodiversity is increasingly apparent while the global

loss of biodiversity is increasingly well-documented. The MA, for example, reports
that the current pace of species loss is up to 1,000 times higher than the background
rates typical over the earth’s history (Figure 1). Habitat is disappearing rapidly, as
we continue to develop land for farming, forestry, livestock pasture and other uses.
For example, a total of 670,000 km
2
of tropical forests were lost in the Caribbean,
Central and South America in the period 1980 to 1995
7
. Mangrove forests, once
covering more than 200,000 km
2
of coastline, have suffered losses of up to 86
percent in certain locations and continue to disappear at a rate of 1–2 percent per
year
8
. 20 percent of the world’s coral reefs have been effectively destroyed and
show no immediate prospects of recovery, with a further 24 percent considered at
risk of imminent collapse
9
.
4 EFTEC. 2005. The Economic, Social and
Ecological Value of Ecosystem Services:
A Literature Review. Final report for the
Department for Environment, Food and
Rural Affairs: London, UK (January);
Farber, S.C., Costanza, R. and Wilson,
M.A. 2002. Economic and Ecological
Concepts for Valuing Ecosystem Services.
Ecological Economics 41: 375–392;

Pagiola, S., von Ritter, K. and Bishop,
J. 2004. Assessing the Economic Value
of Ecosystem Conservation. Environment
Department Paper No. 101. The
World Bank: Washington, D.C.
5 Hooper, D.U., Chapin III, F.S., Ewel,
J.J., Hector, A., Inchausti, P., Lavorel,
S., Lawton, J.H., Lodge, D.M., Loreau,
M., Naeem, S., Schmid, B., Setälä,
H., Symstad, A.J., Vandermeer, J.
and Wardle, D.A. 2005. Effects of
Biodiversity on Ecosystem Functioning:
A Consensus of Current Knowledge.
Ecological Monographs 75(1): 3–35.
6 www.g-8.de/Content/EN/__
Anlagen/2007-03-18-potsdamer-
erklaerung-en,property=publicationFile.
pdf. Related initiatives include the CBD
Work Programme on Incentives (www.
biodiv.org/incentives/review.shtml),
work by the Organisation for Economic
Co-operation and Development on
the economic aspects of biodiversity,
the Environmental Valuation Reference
Inventory (www.evri.ca), as well as the
Bioecon research programme (www.
bioecon.ucl.ac.uk), the Natural Capital
Project (www.naturalcapitalproject.
org) and the ecoSERVICES project
of Diversitas International (www.

diversitas-international.org/core_ecoserv.
html), among many others.
7 See www.fws.gov/birds/documents/
HabitatLoss.pdf for further examples
of habitat change and loss.
8 Duke, N.C., Meynecke, J-O., Dittman,
S., Ellison, A.M., Anger, K., Berger, U.,
Cannicci, S., Diele, K., Ewel, K.C., Field,
C.D., Kiedam, M., Lee, S.Y., Marchand,
C., Nordhaus, I. and Dahdouh-Guebas,
F. 2007. A World Without Mangroves?
Science (6 July 2007): 41b–42b.
9 Wilkinson, C. (ed). 2004. Status of
Coral Reefs of the World: 2004.
Available at www.aims.gov.au/pages/
research/coral-bleaching/scr2004.
Chapter 2 Context: the biodiversity challenge
18
Building Biodiversity Business
Figure 1. Extinctions per thousand species per millennium
100,000
10,000
1,000
Marine
species
Projected future
extinction rate
is more than
ten times higher
than current rate

Current extinction
rate is up to one
thousand times
higher than the
fossil record
For every thousand
mammal species less
than one went extinct
every millennium
Distant past
(fossil record)
Recent past
(known extinctions)
Future
(modelled)
Long-term average
extinction rate
MammalsMammals BirdsAmphibiansAll species
100
10
1
0.1
0
Source: Redrawn with permission, based on an original figure prepared for the Millennium
Ecosystem Assessment by Philippe Rekacewicz and Emmanuelle Bournay of UNEP / Grid-Arendal.
Efforts to conserve biodiversity are likewise changing, based on improved
understanding of the drivers of biodiversity loss. At a global level, the main legal
instrument for conservation is the CBD, which has been signed by more than 160
national governments and has three over-arching objectives
10

:
1. The conservation of biological diversity.
2. The sustainable use of its components.
3. The fair and equitable sharing of the benefits arising out of the utilisation of
genetic resources.
The most common means of conserving biodiversity is to restrict human activity in
areas which are considered highly diverse, contain rare or endangered species, or
which generate important ecosystem services (including cultural services). The CBD
defines a protected area as “a geographically defined area, which is designated
or regulated and managed to achieve specific conservation objectives” (Article
2). Over 12 percent of the global land surface is currently protected under a
range of legal and customary arrangements designed to ensure the conservation
of important ecosystem benefits (see Figure 2). Additional conservation measures
include an expanding regulatory and enforcement toolbox, including Environmental
Impact Assessments and a range of other measures and mechanisms designed
to assess, avoid and / or mitigate the biodiversity losses often associated with
economic activity.
10 Other important biodiversity-related
international agreements include the
Convention on Conservation of Migratory
Species (www.cms.int), the Convention
on International Trade in Endangered
Species of Wild Fauna and Flora (www.
cites.org), the International Treaty on
Plant Genetic Resources for Food and
Agriculture (www.planttreaty.org), the
Ramsar Convention on Wetlands (www.
ramsar.org), and the World Heritage
Convention (whc.unesco.org).
19

Figure 2. Growth of global protected areas over time
a

20,000,000
15,000,000
10,000,000
5,000,000
0
100,000
80,000
60,000
40,000
20,000
0
1873
1883
1893
1903
1913
1923
1933
1943
1953
1963
1973
1983
1993
2003
Cumulative area of sites of known date
Cumulative number of sites of known date

number of sites
area in km
2
a 38,427 protected areas covering some 4 million km² have no date and are not included in the
cumulative graph.
Source: Redrawn with permission, based on Figure 1 in Chape, S., Harrison, J., Spalding, M., and
Lysenko, I. 2005. Measuring the extent and effectiveness of protected areas as an indicator for
meeting global biodiversity targets. Phil. Trans. R. Soc. B 360, 443–455. See www.unep-wcmc.
org/resources/publications/GlobalTargets/Measuring_PA_Extent.pdf#search=%22chape%20harris
on%20spalding%22.
While most ‘official’ protected areas are state property, local communities and
private landowners also protect significant areas of land that do not appear in
global statistics. In Namibia, for example, community-managed conservancies
cover more than 74,000 km
2
or 9 percent of the country’s land
11
. At a global level,
one estimate is that the total forest area under ‘community conservation’ is roughly
equivalent to the area conserved in public protected forests
12
.
Despite the impressive growth of PAs and an expanding conservation toolbox,
there are major gaps in the global conservation network. Many areas that contain
some of the world’s highest concentrations of endemism and species diversity
still lack protection. Less than 1 percent of marine ecosystems, for example, are
currently protected.
Even more disturbing is the evidence emerging from a range of sources which
suggests that current efforts to conserve biodiversity are merely slowing, rather
than reversing, the global erosion of biodiversity (see Figure 3). There is growing

realisation that the world is unlikely to achieve “a significant reduction of the current
rate of biodiversity loss by 2010”, as agreed by government leaders at the World
Summit on Sustainable Development in 2002
13
. Long-term prospects for conservation
remain very uncertain, due to climate change and a host of other threats (e.g. the
rapid spread of invasive alien species through trade, increasing concentration of
human populations in coastal areas, developments in biotechnology). Growing
awareness of climate change, in particular, has led to increasing concern about
its adverse impacts on biodiversity, but also of the potentially significant role that
biological resources can play in mitigating and adapting to climate change
14
.
11 www.dea.met.gov.na/met/
ArchivedNews/030824news.htm.
12 Molnar, A., Scherr, S.J. and Khare, A.
2004. Who Conserves the World’s
Forests? Community-Driven Strategies
to Protect Forests & Respect Rights.
Forest Trends: Washington, D.C.
13 www.biodiv.org/decisions/default.
aspx?m=COP-06&id=7200.
14 Kapos, V., Herkenrath, P. and Miles,
L. 2007. Reducing Emissions from
Deforestation: A Key Opportunity for
Attaining Multiple Benefits. UNEP-
WCMC: Cambridge, UK.
Chapter 2 Context: the biodiversity challenge
20
Building Biodiversity Business

Figure 3. The Red List Index for birds in different ecosystems
1988
Terrestrial
Freshwater
Marine
1992
Red List Index (set to 100 in 1988)
worse better
1996 2000 2004
100
99
98
97
96
95
94
93
92
91
90
Source: Redrawn with permission, based on Figure 5 in Butchart, S.H.M., Stattersfield, A.J., Baillie,
J., Bennun, L.A., Stuart, S.N., Akçakaya, H.R., Hilton-Taylor, C. and Mace, G.M. 2005. Using Red
List Indices to measure progress towards the 2010 target and beyond. Phil. Trans. R. Soc. B 360,
255–268.
The biodiversity challenge is greatest in the developing world, where conservation
efforts are often constrained by political and macroeconomic instability, widespread
poverty, under-developed local economies, lack of capacity and resources and
institutional weaknesses in relevant public sector bodies. It has been estimated that
“well over one half of all protected areas occur in nations where governance is
weak”

15
. The result is many poorly protected ‘paper parks’, a failure to conserve
biodiversity, and, in other cases, conflict with local communities. Biodiversity in
the high seas, beyond national waters, is likewise threatened by the absence
of adequate international agreements and enforcement mechanisms. Major
components of biodiversity – notably invertebrates – remain largely unknown to
science and outside the scope of contemporary conservation efforts.
2.2 Funding biodiversity conservation
Biodiversity conservation has long relied on public finance and private philanthropy
to secure the resources it needs. Unfortunately, reliable data on current biodiversity
funding and expenditure is not readily available. One recent estimate is that the
world spends approximately US$10 billion per annum on conserving ecosystems
16
.
Another source suggests that global spending on PAs is about US$6.5 billion per
annum
17
, while a third source estimates spending on PAs by developing country
governments at between US$1.3 billion and US$2.6 billion per annum
18
. Poor
data on current funding is exacerbated by uncertainty about the effectiveness of
conservation expenditure.
Published estimates of global conservation spending almost certainly underestimate
the true level of effort and resources available. In the United States, for example,
private charitable giving – mainly by individuals – to organisations involved in
‘environment and animals’ amounted to US$8.86 billion in 2005 (out of total
donations of US$260 billion)
19
. The budget of the US National Park Service was

US$2.256 billion in Fiscal 2006
20
, while direct public spending on state-level
wildlife conservation activities came to almost US$1 billion in 2005
21
. Spending on
conservation measures under the 2002 Farm Bill adds another US$3.8 billion per
year
22
. Even allowing for some double-counting, and bearing in mind that significant
15 Pearce, D.W. 2005. Paradoxes in
Biodiversity Conservation. World
Economics 6(3): 57–69.
16 Pearce, D.W. 2005. ibid.
17 James, A., Gaston, K.J. and Balmford,
A. 2001. Can We Afford to Conserve
Biodiversity? BioScience 51: 43–52.
18 Molnar, A., Scherr, S. J. and Khare, A.
2004. Who Conserves the World’s
Forests? Community-Driven Strategies
to Protect Forests and Respect Rights.
Forest Trends: Washington, D.C.
19 Giving USA. 2006. The Annual Report
on Philanthropy for the Year 2005.
AAFRC Trust for Philanthropy: New
York, N.Y. See: www.afp-ggc.org/frm/
presentations/Giving_USA2006-Turning_
Data_Into_Action-Julia_McGuire.pdf.
20 www.nps.gov/faqs.htm.
21 McKinney, C., Ris, L., Rorer, H. and

Williams, S. 2005. Investing in Wildlife:
State Wildlife Funding Campaigns.
U. Michigan. See: www.teaming.
com/pdf/Investing_in_Wildlife_
Full_Report.pdf; www.snre.umich.
edu/ecomgt/pubs/finalReport.pdf.
22 Mayrand, K., Dionne, S., Paquin,
M. and Pageot-LeBel, I. 2003. The
Economic and Environmental Impacts of
Agricultural Subsidies: An Assessment
of the 2002 US Farm Bill & Doha
Round. Unisfera International Centre:
Montreal, Canada (January).
21
spending on conservation by local governments and other public agencies is not
included in the these figures, it seems clear that public and charitable spending on
wildlife conservation in the USA alone exceeds US$15 billion per year. Moreover,
even this figure is dwarfed by private spending on wildlife-related recreational
activities such as hunting, fishing and observing wildlife, which amounted to
US$120 billion in 2006 (just under 1 percent of GDP)
23
.
The funding requirements for biodiversity conservation (or more narrowly for PAs)
are equally uncertain, reflecting the different ambitions of analysts and a lack of
consensus on how much area should be protected in order to conserve biodiversity.
One modest assessment suggests that an additional US$1.1 billion is required to
cover the basic expenses of PA management in developing countries and countries
with economies in transition
24
. This is perhaps optimistic. Most analysts agree that

there is a large unmet need for biodiversity finance, especially in the developing
world (see Figure 4).
Figure 4. Regional variation in the percentage of the overall cost of effective
reserve networks that are met
% overall conservation cost currently met
increasing regional mean per capita income
Developing
Asia
Sub-Saharan
Africa
North Eurasia
North Africa/
Middle East
Latin America
Europe
Australia/
New Zealand
Developed
East Asia
North America
Pacific
100
80
60
40
20
0
Source: Redrawn with permission, based on Figure 3 (Regional variation in the percentage of the
overall cost of effective reserve networks that are met) in Balmford, A., Gaston, K.J., Blyth, S., James,
A. and Kapos, V. 2003. Global variation in terrestrial conservation costs, conservation benefits,

and unmet conservation needs. PNAS 100(3): 1046–1050 (4 February). Copyright 2003
National Academy of Sciences, U.S.A.
Other recent estimates of the global conservation funding gap include:
US$12–13 billion per year over 10 years to expand and manage PA systems •
in developing countries
25
.
Up to US$45 billion per year (over 30 years) to secure an expanded •
network of PAs covering 15 percent of terrestrial and 30 percent of marine
ecosystems, mainly in the tropics. Note that this estimate includes a provision
for compensation of opportunity costs incurred by current resource users
26
.
The latter estimate may seem daunting, particularly when compared to current
government expenditure on conservation. When compared to private spending
on nature-based recreation or the growth of ‘green’ consumer purchasing, on the
other hand, such sums seem much less extraordinary.
23 US Fish & Wildlife Service. 2007.
2006 National Survey of Fishing,
Hunting, and Wildlife-Associated
Recreation: National Overview. See:
library.fws.gov/nat_survey2006.pdf.
24 Vreugdenhil, D. 2003. Protected Areas
Management; Biodiversity Needs
and Socioeconomic Integration.
World Institute for Conservation and
Environment (available at: www.birdlist.
org/downloads/PA_Systems.doc).
25 Bruner, A., Hanks, J. and Hannah, L.
2003. How Much Will Effective Protected

Area Systems Cost? Presentation to the
Vth IUCN World Parks Congress, 8–17
September: Durban, South Africa.
26 Balmford, A., Bruner, A., Cooper, P.,
Costanza, R., Farber, S., Green, R.E.,
Jenkins, M., Jefferiss, P., Jessamy, V.,
Madden, J., Munro, K., Myers, N.,
Naeem, S., Paavola, J., Rayment, M.,
Rosendo, S., Roughgarden, J., Trumper,
K. and Turner, R.K. 2002. Economic
Reasons for Conserving Wild Nature.
Science 297: 950–953 (9 August).
Chapter 2 Context: the biodiversity challenge